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TSP Talk Weekly Wrap Up - A Hawkish Pause

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I hope you've been in stocks through June. All three TSP stock funds are up more than 5.5% for the month and were up more than 2% this week. Stock indices started the week off with gains and the momentum carried on through Tuesday after the release of the Consumer Price Index (CPI). The latest year-over-your CPI was up 4% which was low enough for investors to bet on a rate pause by the Federal Reserve the following day. They were correct.

The Federal Open Markets Committee (FOMC) held rates steady for the first time since they began consecutively raising rates starting in March of 2022. Members of the FOMC also refreshed their projections for future rate hikes and the majority project they will need to raise rates again before the end of 2023. With the collective projection, the new terminal rate was set to 5.6% (or 560 basis points). The current rate is 500-525.

Right off the bat, market projections for the next FOMC meeting in July see a rate hike more likely than not.

Stocks sold-off initially when the rate pause was accompanied with hawkish projection — you can see that sell-off in the chart below. But when Fed Chairman Jerome Powell took the stand, he was able to say what the market wanted and stocks quickly bounced back. Powell separated himself from the dot plot (the FOMC rate projections) and took on a neutral position for the fate of rates. He emphasized that rate changes are data driven and are subject to change. This may have introduced uncertainty around rates over the next few months, but it also left hope that the Fed could be more dovish than it projected in this meeting.

Stocks continued their rally Thursday and didn't seem phased by the hawkish pause. The gains were more spread across the market and not as concentrated in the tech sector. Stocks pulled back some on Friday but stayed buoyant enough to protect most of Thursday's gains.

Investors will be very focused on what Fed members have to say in the coming weeks. Inflation is still considered high but the market taking a sigh of relief to see it cut in half from its high of last year. There is also an increase in optimism that the U.S. economy will evade the rescission that was heavily forecasted earlier in the year.

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Here are the weekly, monthly, and annual TSP fund returns for the week ending June 16:

Below we are looking at the 2 year chart for each of the TSP funds (C, S, I and F). We are looking for the long-term technical challenges their corresponding charts face. We also zoom in on each chart and look at a chart within 3 to 9 months.

The C-fund

SPY (C-fund) continues to make new highs for 2023, but if we take a step back we see the ETF has other milestones in sight, including its all-time high. But the high from the end of March 2022 is the first significant price that could be reachable if stocks can keep up their summer climb. The C-fund would need to rise 2.9% from its current price to match that March 2022 peak.

Two-Year Chart

Zooming in to a three-month chart for the SPY, the ETF has again passed through rising resistance like it did last week. This is the kind of chart that ignites Fear-of-Missing-Out mentality. The C-fund reached another 2023 high on Thursday before pulling back 0.37% yesterday. The C-fund ended the week with a gain of 2.62%

Three-Month Chart

The S-fund

The Dow Jones Completion Index (S-fund) is much further from its all time highs than SPY. The index does have its 2023 highs in sight but still has some ground to cover.

Two-Year Chart

DWCPF (S-fund) is getting closer to matching its 2023 highs made on February 2nd. The S-fund needs to climb 3.1% to match the high. Small caps have the momentum but how long will the bulls keep buying as we move deeper into the summer. This week the S-fund was up 2.05%.

Six-Month Chart

The I-fund

The ETF EFA (I-fund) is facing resistance on its long-term chart. A resistance line that come from peaks in late 2022 marks the I-funds latest price. The I-fund did make a new high for 2023 this week.

Two-Year Chart

The I-fund produced new highs for the year on Thursday and then but pulled back slightly (-0.07%) on Friday. The EFA opened up higher intraday to set in motion another new high, but the ETF slipped back below the resistance line it had opened above in the morning. Now the ETF faces an open gap within reach from Tuesday's gap up open. The I-fund led the TSP funds with a 2.75% gain for the week.

Three-Month Chart

The F-fund

The ETF BND (F-fund) has been oscillating around its 200-day EMA for most of the year. Will this continues until the 500-day EMA slowly moves closer to the 200-day EMA, or can bonds carry long-term momentum to put its price above the 500-day EMA like it was in 2021? There is a rising support line that could get it past its 200-day EMA, but it did not hold up through the last couple weeks.

Two-Year Chart

BND (F-fund) is now under its 200-day EMA and the long-term support line. There are also open gaps that could entice traders to fill. The F-fund lagged the TSP funds this week with a gain of 0.2%

Nine-Month Chart

Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.

Thomas A Crowley
Last Look Report
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The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

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Updated 06-17-2023 at 09:49 PM by TommyIV

TSP Talk Weekly Wrap Ups


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S&P500 (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

( Real-time)
EFA (I Fund) (delayed)

( Real-time)
BND (F Fund) (delayed)

( Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes